Russia Tries To Scuttle Proposed Trans-Caspian Pipeline

In an attempt to preserve control over energy exports out of the Central Asia, Russia is taking a two-track approach to opposing the possible construction of trans-Caspian Sea pipelines. While Russian diplomats argue against an undersea pipeline on environmental grounds, Moscow is concurrently beefing up its military presence in the region.

One or more pipelines stretching along the Caspian's seabed would effectively break a Russian monopoly over export routes between Central Asia's key energy producers  Kazakhstan and Turkmenistan  and Western markets. Kazakhstani diplomats have expressed interest in a trans-Caspian oil pipeline that would enable Astana's oil exports to link up with the existing Baku-Tbilisi-Ceyhan (BTC) route. Azerbaijani and Kazakhstani officials have announced that they hope to finalize an agreement by mid April on the volume of Astana's exports via BTC.

At present, Russia enjoys a controlling interest over export routes for Central Asian energy. The Caspian Pipeline Consortium (CPC) route, for example, connects oil fields in western Kazakhstan with the Russian port of Novorossiysk. Gas from Kazakhstan, Turkmenistan and Uzbekistan is similarly funneled through Russia.

Kazakhstan's interest in BTC participation has been spurred in part by Moscow's recent attempts to increase its grip on the Caspian Pipeline Consortium, which in addition to the Russian and Kazakh governments includes major Western energy conglomerates. Over 30 million tons of Kazakhstani oil was pumped via the CPC pipeline in 2005. A planned expansion could increase capacity to roughly 67 million tons within a few years. However, disputes among the shareholders over transit fees charged by Russia and the consortium's structure threaten to delay the pipeline's expansion.

Russia's existing energy policy counts on ongoing access to cheap Central Asian gas. The development of a gas export route that circumvents Russia would likely require Russia to pay higher prices for Central Asian energy. Thus, Moscow is working hard to prevent a trans-Caspian pipeline from getting off the drawing board.

The Russian government recently brushed aside protests from Greenpeace and other groups opposing construction of a Pacific pipeline because the chosen route poses a threat to Lake Baikal's delicate ecological balance. Yet, when it comes to the Caspian, Russian diplomats are basing their opposition to an undersea route on environmental concerns. "A major gas pipeline would pose a serious, dangerous risk to the prosperity of the entire region," Alexander Golovin, Moscow's special envoy on Caspian issues, said after a recent meeting in Moscow of the five Caspian littoral states -- Russia, Iran, Azerbaijan, Turkmenistan and Kazakhstan.

Russia has staked out a position that a potential pipeline project, regardless of the route it takes on the seabed, would require the consent of all five Caspian littoral states in order to proceed. "The issue should be solved between all the countries around the Caspian," Golovin said. "The Caspian is a unique water source that must be treated carefully, including when it comes to pipeline installations."

Azerbaijan, which stands to gain the most from undersea pipelines, has challenged Russia's assertions concerning the ecological danger. "The Russian side has submitted arguments, but Azerbaijani experts have provided demonstrations," said Azerbaijani Deputy Foreign Minister Khalaf Khalafov. At the same time, he refrained from rejecting the Russian pipeline stance outright. Kazakhstani officials have also questioned the validity of Russia's environmental claims.

In addition to Russian opposition, the lack of a Caspian Sea territorial pact could hamper the construction of a pipeline. The five states have long been unable to agree on a formula to divide establish Caspian Sea boundaries. [For background see the Eurasia Insight archive]. Government representatives of the five littoral states have expressed hope that the current stalemate could be broken in the near future. Nevertheless, there have been few tangible signs of progress toward a comprehensive Caspian pact in recent months.

In support of its diplomatic efforts to derail discussion of a trans-Caspian pipeline, Moscow is taking steps to reinforce its strategic position in the region. On March 24, Russian media heralded the start of construction on a third Makhachkala-class gunboat intended for eventual deployment with the Caspian Flotilla.

At the same time, Russian officials, including Foreign Minister Sergei Lavrov, continue to press a diplomatic offensive designed to prevent the United States from establishing a military presence in the Caspian Basin. At the March 14-15 meeting of representatives from the five littoral states, Lavrov repeated Russia's opposition to the potential deployment of "third-party military forces" in the region. The Russian foreign minister claimed that some foreign states, which he did not name, harbor ambitions "to infiltrate the Caspian politically and militarily with ill-defined goals." He added that the five Caspian littoral states had the ability to ensure regional security without outside help. "It is easy to invite foreign troops, but it can be difficult to make them withdraw," he said.

Observers interpreted Lavrov's remarks as a reaction to widely rumored US attempts to establish a military base in Azerbaijan, and US efforts to assist Baku in upgrading its naval forces. Azerbaijan has not endorsed the Russian plan to prohibit outside military forces from being based in the region.